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| | London Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | London close: UK stocks settle at 2015 high as market awaits ECB decision London's FTSE 100 eked out a gain of 0.5% on Monday in the absence of US trading, as investors took advantage of a quiet news day to push stocks to their highest levels of the year
The Footsie finished 35.26 points higher at 6,585.53, its best finish since 29 December 2014 when it settled at 6,633.50.
Nevertheless, with Wall Street closed for Martin Luther King Jr Day and the economic data calendar on the thin side, markets were relatively subdued ahead of a pivotal European Central Bank meeting on Thursday.
"Monday's caution comes ahead of the key policy meeting from the European Central Bank where many have ECB President Mario Draghi pegged to announce full-blown quantitative easing to resuscitate the Eurozone economy," said Jasper Lawler from CMC Markets.
Aside from the ECB, a general election also looms in Greece on Sunday with politicians entering their final week of campaigning, as the support for anti-austerity party Syriza continues to grow.
Meanwhile, stocks in Shanghai plunged nearly 8% on Monday with shares in the financial sectors faring the worst after securities regulators said many brokerage firms had broken stricter rules on margin trading.
Margin finance involves the borrowing of money to buy stocks, something which the government is concerned will lead to instability after record margin lending resulted in a 63% surge in equity values over the past six months.
Fears about slowing growth in China were also in focus ahead of data on Tuesday which is forecast to show that the world's top metals user expanded by just 7.2% in the fourth quarter. This would indicate the slowest rate of gross domestic product growth since the height of the financial crisis.
There is speculation that Premier Li Keqiang could lower the 2015 forecast for expansion after being cited as saying that China's economy faces significant downward pressure this year.
Mining stocks drop, retailers gain
Stocks in the heavyweight mining sector were lower, including Rio Tinto, Glencore, BHP Billiton and Anglo American, as concerns about a Chinese slowdown and falling metals prices weighed on shares.
Credit Suisse said in a note that the mining industry faces a "challenging" outlook for 2015 and "deflationary trends" could put dividend security under pressure.
Heading the other way were the retailers ahead of a raft of Christmas updates from high street names this week. Dixons Carphone, due to report on Wednesday, was leading the risers on the FTSE 100. AO World, Ted Baker and Kingfisher were also on the rise.
Grocery giant Tesco was also making gains after Morgan Stanley upgraded the stock to 'overweight' and hiked its target for the supermarket stock to 260p from 155p. "We believe Tesco has sufficient firepower and self-help to improve meaningfully the competitiveness of its UK customer proposition," it said.
Takeover target Afren was weaker after the company agreed to a 11-day extension to the deadline for Nigerian group Seplat to return to the table with a possible offer. The latter approached the FTSE 250 oil group last month about a potential tie-up and now has until 17:00 on 30 January to 'put up or shut up'.
Infrastructure firm Balfour Beatty rose after having been appointed sole contractor to a new £1.5bn framework that will run until February 2019. The national framework is operated by public sector-owned environment specialist Scape Group |
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| | Market Movers
techMARK 3,021.43 +0.88%
FTSE 100 6,585.53 +0.54%
FTSE 250 16,067.19 +0.91% FTSE 100 - Risers
Dixons Carphone (DC.) 446.50p +4.44%
Coca-Cola HBC AG (CDI) (CCH) 1,122.00p +4.18%
Travis Perkins (TPK) 1,852.00p +3.81%
CRH (CRH) 1,557.00p +3.25%
Kingfisher (KGF) 327.80p +3.08%
ARM Holdings (ARM) 1,017.00p +2.73%
GKN (GKN) 365.50p +2.70%
Persimmon (PSN) 1,487.00p +2.62%
Barclays (BARC) 230.00p +2.52%
Babcock International Group (BAB) 1,033.00p +2.48%
FTSE 100 - Fallers
Glencore (GLEN) 247.70p -1.92%
BHP Billiton (BLT) 1,368.00p -1.44%
Rio Tinto (RIO) 2,856.00p -1.13%
BP (BP.) 408.90p -1.08%
Fresnillo (FRES) 876.00p -0.96%
Anglo American (AAL) 1,089.50p -0.91%
Unilever (ULVR) 2,729.00p -0.66%
Morrison (Wm) Supermarkets (MRW) 191.50p -0.62%
Smiths Group (SMIN) 1,082.00p -0.55%
SSE (SSE) 1,489.00p -0.53%
FTSE 250 - Risers
Ted Baker (TED) 2,400.00p +4.99%
esure Group (ESUR) 233.50p +4.71%
SIG (SHI) 173.30p +4.27%
Infinis Energy (INFI) 191.60p +4.24%
Hays (HAS) 150.50p +4.15%
Hunting (HTG) 462.40p +4.12%
AO World (AO.) 267.50p +4.09%
Premier Oil (PMO) 146.30p +4.05%
Computacenter (CCC) 640.00p +3.90%
Wetherspoon (J.D.) (JDW) 830.50p +3.81%
FTSE 250 - Fallers
Afren (AFR) 27.65p -6.90%
Fidelity China Special Situations (FCSS) 135.00p -3.85%
Jimmy Choo (CHOO) 167.00p -3.24%
Card Factory (CARD) 272.00p -2.68%
BlackRock World Mining Trust (BRWM) 308.00p -2.13%
Fisher (James) & Sons (FSJ) 1,038.00p -2.08%
Vedanta Resources (VED) 397.00p -2.07%
Brit (BRIT) 252.00p -1.87%
TSB Banking Group (TSB) 269.00p -1.79% |
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| | Europe Market Report | | Europe close: Stocks gain on bets the ECB will introduce full-blown QE Stocks in the euro-area advanced on bets the European Central Bank will unleash full-blown quantitative easing to revive the weak economy. French President François Hollande on Monday said the monetary authority would announce plans to buy Eurozone sovereign debt when it meets later in the week. “On Thursday, the ECB will take the decision to buy sovereign debt, which will provide significant liquidity to the European economy and create a movement that is favourable to growth,” Hollande said in a speech to business leaders at the Élysée Palace, according to The Wall Street Journal. However, since his speech the leader has backtracked, saying that he was referring to the "hypothesis" of QE, not that it was certain. His remarks follow reports ECB President Mario Draghi met with German Chancellor Angela Merkel last week to discuss plans for QE. The ECB has been under mounting pressure to take further action as Eurostat confirmed that the Eurozone entered deflation in December. Denmark cuts deposit rate after SNB move Denmark has cut its deposit rate in a bid to preserve the country’s currency peg after the Swiss National Bank last week decided to scrape a three-year cap on the franc. The Danish central bank lowered its deposit rate to -0.2% from -0.05%, while the lending rate was also cut to 0.05% from 0.2%. "The currency could come under more upward pressure once the European Central Bank quantitative easing is implemented and perhaps amid safe-haven flows as an alternative to Switzerland," said Jessica Hinds, European economist at Capital Economics. |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Italian banks, Greek elections Italy’s government is said to be planning a reform that would force cooperative banks to become joint-stock companies. Shares in Italian cooperative banks gained after Il Sole 24 Ore wrote on Saturday that the new measures could be included in a government decree as soon as Tuesday. Banco Popolare, Banca Popolare di Milano Scarl and Banca Popolare dell’Emilia Romagna were among the big risers. In Greece, the nation is preparing for elections on Sunday, with left-wing party Syriza continuing to lead in recent polls. According to a poll published on Sunday in the Greek daily Kathimerini that is a compendium of 12 surveys run in tandem with the University of Macedonia, the Syriza party maintained the lead with 34.7% support. This was 4.5 percentage points ahead of the conservative New Democracy led by Prime Minister Antonis Samaras that received 30.2%. “Political uncertainty in Greece before and after the election on 25 January will raise liquidity and funding risks for banks, Fitch Ratings said. “But potential liquidity strains should be manageable since the banks are better prepared to withstand deposit outflows than when elections were last held in 2012, as long as access to Eurosystem facilities is maintained.” In the US, the markets were closed for Martin Luther King Jr. Day. In Asia, Chinese shares retreated after regulators took steps to rein in speculative lending. Beijing cracked down on credit products that have been blamed for fuelling excessive market speculation over the past three months. Energy stocks slide A gauge of energy stocks fell, including Total SA and BP as oil prices edged lower. The fall in oil prices has led Middle Eastern companies to put their initial public offerings on hold, according to Ernst & Young. Brent crude dropped 2% to $49.15 per barrel in afternoon trade, according to the ICE. Telefonica SA gained following reports Hutchison Whampoa is considering a purchase of the Spanish company’s wireless unit O2 in the UK. Schindler Holdings rallied after raising its profit estimate for 2014. |
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| | Broker Tips | | Broker tips: Tesco, Tullow Oil, Greene King, KAZ Minerals Supermarket operator Tesco has scope to materially improve its UK operations, according to Morgan Stanley which upgraded the stock from 'equalweight' to 'overweight' and hiked its target from 155p to 260p.
Together with moves to optimise its portfolio, that should drive the shares to outperform over the next 12 months, Morgan Stanley analyst Edouard Aubin said.
Tullow Oil has $2.4bn of headroom on its debt facilities, but UBS still reckoned that the oil and gas group faced a "funding risk" as it slashed its target for the stock from 465p to 335p and maintained a 'neutral' rating.
"A cyclical downturn in E & P asset markets has thwarted Tullow's execution of a key leg of its strategy - the early monetisation of discoveries and recycle of capital. This means until completion of the Tweneboa-Enyenra-Ntomme [project in Ghana] in mid-2016 leverage will remain elevated," UBS said.
Greene King's Christmas trading update on Monday was "slightly lacklustre", according to Canaccord Genuity, though the broker maintained its 'buy' rating on the pub and brewery group.
"Today's slightly lacklustre [third-quarter statement] from Greene King underlines the importance of the Spirit acquisition and the £30m of synergies to be extracted," Canaccord analyst Nigel Parson said. "But the deal is more than purely defensive, we believe the combined entity will be a much stronger investment proposition with higher quality earnings, stronger free cash flow and better growth prospects. This goal is where investors need to remain focused."
Credit Suisse has said investors of Kaz Minerals should keep an eye out for currency movements and balance-sheet concerns at the Kazakhstan-focused copper producer, as it reiterated its 'underperform' rating for the stock.
In a research note on Monday, the bank said: "Any unexpected project delays and/or weaker copper prices could pressure the balance sheet. At spot copper prices we would anticipate a funding gap which would require additional facilities and/or capex deferrals." | | |
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